July 2016 S&P Case-Shiller Index Report Affirms Ease of High End Prices

The much anticipated Case-Shiller report for the 5-county SF Metro Area just came out. Basically this report shows patterns for the entire SF Bay Area including comparison snapshots back to 2000 through the dotcom bust on through the great recession of 2008 and on up to July 2016.

The overall take away from these charts is that the higher priced home segment (houses and condos) has hit plateaus and is cooling down while the more affordable market homes are slowly appreciating. This conclusion is in line with other reports that have come out over the past month.

Our complete report is here.

All the numbers on C-S charts refer to a January 2000 home price of 100. Thus a reading of 228 signifies a price which has appreciated 128% above that of January 2000.

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However, the mid-price and high-price tiers have exceeded their previous peak values in 2006-2007, while the low-price tier, though climbing rapidly, is still well below its subprime-loan-fueled high point.

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The appreciation rate for higher priced homes was significantly lower this spring than in the previous 4 spring selling seasons, and has generally plateaued in recent months. This plateauing is not uncommon during the summer months.

The past 12 months:

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Since the recovery began in 2012:

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Long-term trends for the high home-price tier in the Bay Area, which predominates in most of San Francisco, southern Marin and Lamorinda/Diablo Valley.

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The Mark Company: No New Construction in July

The July 2016 monthly report from The Mark Company (recognized authority on urban residential real estate sales and marketing, including in San Francisco) just came out. It’s interesting reading in that just as has been noted during this month’s round of blogs condo inventories are high, sales are slower (with some district exceptions) and there was no new construction affecting residential real estate in July. All this, according to expert SF real estate watchers, is an expected normalizing of the market.

The report starts off with this positive observation: No new construction inventory entered the market during July as we continue to see some signs of market normalization. Watch for competition to heat up as we approach the traditionally strong fall months and new product hits the market. San Francisco expects to add approximately 300 units by year-end.

Click here to view the complete San Francisco report as an online PDF.

More Slowdowns in Condo Sales in SF

We recently wrote on the summer seasonality slows in the San Francisco home market. And now the Mark Company Trend Sheet for June 2016 that just came out is affirming that new project condo sales are slowing—perhaps dramatically. While the Mark Trend Sheet could be somewhat incomplete (projects could be coming out of escrow rather than units going into contract which is how the sheet records sales) its showing that the 32 new construction condos that sold in June are down 66% year over year. There are now 1195 new project condos on the SF market, up 47% year over year. Based on that rate it looks like there are 37 months of new condo inventory on the market.

Comparing the February MCTS with the MCTS June sheet (see image below) its apparent that some slowdown is afoot. I have to emphasize “apparent” as all the info may not be here. For instance the Mark Company’s ultra luxury project 181 Fremont’s marketing commencement date was 2 months ago in May. But there’s no status on sales for 181 Fremont.

MCTScompareThe Mark Company Trend Sheet is also available as a PDF here.

June ’15 to June ‘16 Home, Condo and TIC Sales in San Francisco

What’s happened in home, condo and TIC sales over the past year in San Francisco, ending on June 30, 2016? Well…lots, as you will see below in the sales charts built on information from SF’s Multiple Listing Service.

We’ll start off with a colorful image that depicts all the neighborhoods of San Francisco.

This is followed by a first chart that illustrates the overall SF sales. Note how home sales in the $750,000 to $999,000 range comprise the most sales: 628 total. The least amount of sales is condos at $10 million and over. In 2013 the home sales for $500,000 to $749,000 were the biggest segment.

Then the SF home sales activity for the past year is presented by charts illustrating individual city districts and neighborhoods. The analyses are broken out by number of transactions in designated sales-price segments.

Note that median sales prices will change every time the time period or neighborhoods included in an analysis change.


Summer Seasonality in the San Francisco Homes Market

Are we in a summer slow down for home sales here in San Francisco? The charts below reflect a slowing in June, so I’m thinking we’re in the summer season doldrums. Yet, there are new listings coming up and new sales taking place. There’s some activity even in slower months. With this in mind, and with an eye on specific properties and their marketability, this seasonal weakening period could be a smart time to buy or sell.

What contributes to seasonal slumps? Inventory levels, buyer demand, and median home prices are the major players—as the charts illustrate. Additionally, there are factors of general economic conditions, financial market movements, interest rate changes, local stock market IPOs, new construction coming on the market, and the unpredictable natural or political events. That’s quite a murky crystal ball. We’ll probably have to wait until July/August is over, and get into the autumn season to get a real sense of how the SF market is doing.

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What SF Homebuyers Bought in 2013: A Survey

Penthouses, Mansions, Short Sales & Fixer-Uppers

What Did San Francisco Homebuyers Buy in 2013?

Views, prices, architecture, neighborhoods, property types and sizes, parking, probate sales and appreciation rates: We data-mined all of San Francisco’s 2013 sales reported to MLS through the end of November and charted the results below.

 

Sales as described in and reported to San Francisco MLS by 11/25/13. All data herein is from sources deemed (at least somewhat) reliable — i.e. the information input by listing agents regarding their own listings — but may contain errors and is subject to revision. These charts do not include sales unreported to MLS, such as the sale of many so-called “pocket listings” and many of the new-development condo sales that occur.

September Case-Shiller Index Released

The Case-Shiller Index for the San Francisco Metro Area covers the house markets of 5 Bay Area counties, divided into 3 price tiers, each constituting one third of unit sales. Most of the city of San Francisco’s house sales are in the “high price tier.” The Index is published 2 months after the month in question and reflects a 3-month rolling average. September’s Index was just released today, November 26th.

This first chart illustrates the price recovery of the Bay Area high-price-tier home market which really got under way in 2012. In both 2012 and 2013, home prices surged in the spring and then plateaued in the summer-autumn. The surge in prices that occurred in spring of 2013 was particularly dramatic, reflecting a frenzied market of huge buyer demand, historically low interest rates, increasing consumer confidence and extremely low inventory. In San Francisco itself, it was further exacerbated by the high-tech-fueled explosion of new wealth. The market has since calmed down somewhat and that cooling is reflected in the Index readings of the past three months (through September).

Case-Shiller Index numbers all reflect home prices as compared to the home price of January 2000, which has been designated with a value of 100. Thus, a reading of 180 signifies home prices 80% above those of January 2000.

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This second chart reflects what has occurred since 1996 showing the cycle of recession, recovery, bubble and decline/recession.

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This third chart compares the 3 different price tiers since 2000. The low-price-tier’s bubble was much more inflated by the subprime lending fiasco – an absurd 176% appreciation over 6 years – which led to a greater crash than the other two price tiers. All 3 tiers have been undergoing dramatic recoveries, but because the bubbles of the low and middle tiers were greater, their recoveries leave them well below their artificially inflated peak values of 2006. It may be a long time before the low-price-tier of houses regains its previous peak values. The high-price-tier, with a much smaller bubble, and little affected by distressed property sales, is now pretty much back to its previous peak of 2007. Many specific neighborhoods in the city of San Francisco have now surpassed previous peak values.

It’s interesting to note that despite the different scales of their bubbles, crashes and recoveries, all three price tiers now have similar overall appreciation rates when compared to year 2000: ranging from 72% for the low-tier, to 80 to 83% appreciation for the mid and high tiers, over the past 13 years. The gap is relatively small and has been converging in recent months.

Different counties, cities and neighborhoods in the Bay Area are dominated by different price tiers.

Remember that if a price drops by 50%, then it must go up by 100% to make up the loss: loss percentages and gain percentages are not created equal.

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Bay Area Home-Value Map

Home Values around the San Francisco Bay Area

A map of median house sales prices by city and town
for 3rd quarter 2013 sales reported to MLS.

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In the map above, “k” signifies thousands of dollars and “m” millions of dollars. In one or two instances where the number of sales was insufficient for meaningful statistics, the median sales price is for the 2nd and 3rd quarters combined.

Maps that break down median sales prices and average dollar per square foot values for houses and condos in the different San Francisco neighborhoods can be found here:

SF Neighborhood Values Maps

Median Sales Price is that price at which half the sales occurred for more and half for less. The single median price for a town, city or neighborhood almost always disguises an enormous variety of sales prices in the underlying, individual home sales: For example, median house sales prices in the city of San Francisco range from under $500,000 to over $4,000,000 by neighborhood. Median sales prices may be and often are affected by other factors besides changes in value, such as seasonality; changes in financing conditions, buying patterns and available inventory; and significant changes in the distressed and luxury home segments. Short-term fluctuations are much less meaningful than long-term trends.